ENSCO International Inc. (ESV) expects to take delivery of the third of seven ENSCO 8500 Series ultra-deepwater semisubmersible drilling rigs (ENSCO 8502) in early 2010. This follows the builder’s (Keppel FELS Limited of Singapore) assurance that the manufacture is on time and within budget.

Following its scheduled delivery, mobilizing and outfitting, ENSCO 8502 will start operations in the U.S. Gulf of Mexico (GoM) under a two-year contract with Nexen Inc. (NXY) during the second quarter of 2010. The contract may be extended up to 3 to 4 years.

Following the delivery of the first 8500 Series rig ENSCO 8500 in September 2008, the company received the second in this series, ENSCO 8501, in October 2009.

ENSCO 8503 is scheduled for delivery in the fourth quarter of 2010, with two-year contracts in the GoM. ENSCO 8504 is scheduled for delivery in 2011. ENSCO 8505 and ENSCO 8506 are scheduled for delivery in 2012.

Following the delivery of ENSCO 8502, the company will have 4 ultra-deepwater semisubmersible rigs in its active fleet. ENSCO has already invested more than half of the $3 billion committed to the ENSCO 8500 Series newbuild program. The company is well on its way toward having the world’s largest fleet of ultra-deepwater semisubmersibles capable of drilling in water depths of 7,500 feet or more.

We believe that ENSCO has a competitive advantage in the design of its newbuild deepwater rigs. The fundamentals surrounding the deepwater segment remain solid and there is significant visibility for continued day rate improvement despite lower commodity prices.

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